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Gold hits 1-month peak

· Gold prices surged over 2,5 percent to their highest in a month last Thursday after the US Federal Reserve announced a massive stimulus to combat the economic toll of the coronavirus pandemic.

Spot gold jumped 2,5 percent to $1 686,85 per ounce, having earlier hit its highest since March 9 at $1 690,03. It has risen about 4,2 percent so far this week. US gold futures settled 4,1 percent higher at $1 752,80.

· “The Fed unveiled yet another howitzer from its arsenal offering substantial relief to small and medium sized businesses as well as municipalities,” said Tai Wong, head of base and precious metals derivatives trading at BMO.

· Gold: Mildly bid below $1,700 amid coronavirus-led risk-off

“Gold’s rallying because this monetary largesse will eventually have to be repaid and that payment may come as sudden higher inflation somewhere down the road.”

Although the broad risk-off could keep gold prices on the bulls’ radar, an absence of major data and Easter Monday holidays in some of the key markets could keep prices in check.

· “We are a long way off from the peak in many countries in terms of the virus,” said Capital Economics assistant commodities economist Kieran Clancy. “This uncertainty will continue to benefit gold.”

The economic projections vary, but the latest from banks like Citigroup and JPMorgan Chase is that markets will see at least a $5 trillion hit to the world economy over the next two years due to all the coronavirus-related shutdowns.

The gold market is looking strong this month, with many analysts expecting gold prices to keep rising in Q2, Q3, and Q4.

· “Investors are still uncertain over the U.S. equity rally; therefore, the underlying need for safety still exists on the back of everyone’s mind … There is still a lot of uncertainty. People are a little bit over-optimistic on how the money coming from the Federal Reserve will make into the pockets of the consumer,” Blue Line Futures chief market strategist Phillip Streible told Kitco News.

Streible is forecasting for gold to average $1,750 in Q2, $1,850 in Q3, and $2,000 in Q4.

The Federal Reserve is fairly limited in the tools that it has and it looks like it will be letting inflation run, which is a big deal for gold in the long-term, Streible pointed out. “The Fed said it is not concerned about inflation right now. That really lets the floodgates open on gold moving higher. I think that gold looks better in the next couple of quarters,” he said.

· Melek's short-term target is $1,800 an ounce, followed by gold, eventually rising to $2,000.

· More upside for gold in the short-term is also being projected by Standard Chartered Bank analyst Suki Cooper, who sees an average of $1,725 for Q2.

“Spot gold prices have started to consolidate around $1650/oz, but the macro backdrop remains conducive for further price gains,” Cooper noted. “Unprecedented monetary and fiscal stimulus, negative-yielding debt and low interest rates for longer imply gold will continue to attract a flight to safety and quality.”

Cooper sees retail investor demand boosting prices higher. “Various Mints around the world have reported March sales reached multi-year highs. In the U.S., April sales are already at their highest since April 2013,” she said.

· Gold-price sentiment overwhelmingly bullish

Kitco News did its gold survey one day earlier than normal this week, as markets around much of the world are closed on Good Friday.

All fifteen market professionals who took part in the Wall Street survey look for gold to rise next week.

Participants in the weekly Kitco gold-price survey look for the metal to maintain its upward momentum next week as central banks and governments keep rolling out measures to prop up an economy that is being battered by the COVID-19 pandemic..

"The path of gold will be windy, but it's invariably higher as the costs of COVID-19 sink in," said Adam Button, managing director of ForexLive.

The U.S. Federal Reserve announced another $2.3 trillion effort Thursday to prop up local governments and businesses. The move came on a day when weekly initial jobless claims rose another 6.6 million, bringing the total for the last three weeks to nearly 17 million.

Reference: Reuters, FXStreet, Kitco